2018 (8) TMI 933 - AAR - GST

Levy of GST - electronic commerce operator or not - Whether the money paid by the customer to the driver of the cab for the services of the trip is liable to GST and whether the applicant company is liable to pay GST on this amount? - Held that - It is clear that the electronic commerce operator shall be liable to pay tax on the services provided by a motor cab or maxi cab or motor cycle or radio-taxi, by way of transportation of passengers, if such services are supplied through it and it shall be deemed that the electronic commerce operator is deemed to be supplier in such cases - There is no doubt that the services of transportation of passengers is supplied to the consumers through the applicant and by virtue of this provision, it shall be deemed that the applicant would be deemed to be the supplier liable to pay tax in relation to the supply of such service by the taxi operator. Ruling - The applicant is liable to tax on the amounts billed by him on behalf of the taxi operators for the service provided in the nature of transportation of passengers through it, in accordance with the provisions of sub-section (5) of section 9 of the Central Goods and Services Tax Act 2017.

Summary

Issues:
1. Whether the money paid by the customer to the driver of the cab for the services of the trip is liable to GST and whether the applicant company is liable to pay GST on this amount.

Analysis:
The applicant, a Private Limited Company registered under the Goods and Services Act, sought an advance ruling on the liability of GST on the money paid by customers to cab drivers for trip services. The applicant operates a Taxi Aggregation Service where billing is done in the driver's name, and customers pay the driver directly. The applicant only collects service charges for IT services provided, not trip commissions. The turnover of drivers is stated to be below the threshold for GST, and the applicant believes GST should not be levied on trip amounts. The applicant is registered under GST and charges GST on monthly service charges to cab operators.

The Authority verified the applicant's business model, where the applicant provides a mobile application to customers and taxi operators, collecting monthly charges from operators for using the application. The applicant undertakes to pay GST on these charges. The applicant does not charge consumers any additional fees, only sending invoices for service usage. The customer books the taxi through the application, and the operator receives payment directly from the customer. The applicant's role is limited to issuing invoices on behalf of operators.

Referring to Section 9(5) of the CGST Act, the Authority noted that electronic commerce operators are liable to pay tax on services like transportation of passengers provided through them. Notification No. 17/2017 specifies services like radio-taxi transportation under this provision. As the applicant facilitates transportation services through taxi operators, it is deemed the supplier liable to pay tax on such services. Therefore, the ruling states that the applicant is liable to tax on amounts billed for transportation services in accordance with relevant GST provisions and notifications.

In conclusion, the ruling clarifies that the applicant is liable to pay GST on amounts billed for transportation services provided by taxi operators through the applicant's platform, as per the specified provisions of the CGST and KGST Acts along with relevant notifications.